Time Warner Cable released its first quarter earnings for 2009 today, and we were mighty curious to see if there was any evidence yet of the Irwin Allen production of The Exaflood, coming to an Internet connection near you. Would Time Warner Cable be telling its investors that Internet brownouts were likely on its Internet service? Would they sell investors on the importance of stemming the tide of bandwidth piggies by slapping them with gauges, tiers, and overlimit fees? Would management proudly unveil their carefully crafted plan of action to cope with the crisis just a year or two in the distance?
No. No. And, oh please get real.
Time Warner Cable
Part of our job on StoptheCap! is to educate you with actual facts before the non-reality bizarroworld of Time Warner Cable marketing gets you to start believing in their tales of an Internet teetering on the edge of a cliff. The fun part is, we get to educate you with their own material.
It’s not enough to simply oppose bandwidth/usage caps and rationing plans. One must also be able to refute why they are supposedly necessary, and be able to recognize and debunk propaganda when you see it.
Throughout the latest quarterly report, as well as in today’s conference call with investors, I waited to hear one mention of the crisis that they claim is forthcoming. Let’s review their own claims from just two weeks ago:
- The Internet is growing a lot.
- In order to keep up with the growth, we need to expand our infrastructure.
- A tiered pricing system manages growth and provides incentive to stay within your plan limits.
- DOCSIS 3 is expensive and we need the revenue from this plan to give you the faster speeds you demand.
- We need to let people who use the Internet less get a lower cost plan.
- Without this kind of approach, our service will be subject to brownouts and failure.
That sounds mighty serious and important. It’s definitely something you’d need to disclose to shareholders and investors if you thought it was this critical to the future of your company, and considering broadband represents 1/3rd of your package of services, that’s something you cannot keep to yourself.
If it was true, that is. If I could dance like this, I’d be Dancing With the Stars.
At the end of the quarter, within the time-frame when the corporate decision to expand metered use testing was approved, there is not one word about any of this that comes anywhere close to the Chicken Little Sky is Falling campaign foisted on Rochester, the Triad, San Antonio, and Austin. There is none of this in the quarterly report, nothing about it in today’s conference call, up until an investor group asked the company about its public relations catastrophe.
If you review the audio from our earlier article on today’s meeting, enjoy the furious backpedal by CEO Glenn Britt, who tries to shift the topic to whether the Internet on cable was a crazy idea back in the 1990s. In the end, it’s downplayed as a marketing test that got pushback, and the company will need to continue to explore and test new ways of changing its broadband business plan in the future. It’s the mother of all dial-backs. This was the easy part to discern, but when you dig deeper, it doesn’t take long before you realize we’ve all been had:
- Time Warner’s only firm plans for DOCSIS 3 upgrades were for New York, NY (a city that was never on the “experiment” list we note).
- Despite assurances that test cities would be getting upgrades as a result of the tiered pricing system, the company disclosed today there were no plans to immediately implement DOCSIS 3 in any other city.
- Company officials downplayed the need for performing the upgrade in the first place, claiming there has not been much clamor for speed (so much for the crisis nearly upon us!)
- The Lite plans for lighter users impact on the company’s returns for broadband, but are compensated for by heavier users who may actually be carrying that financial load with Turbo subscriptions.
- The company again plans to reduce spending overall in the coming year, not increase it.
- Most of the infrastructure enhancements in their fiber network aren’t for broadband, they’re for “switched digital video” which is helpful for cable systems trying to deliver additional HD channels.
So we can chalk this entire affair up to a marketing plan designed to convince customers that paying more for less, with absolutely no assurance (and evidently no intention) that “necessary” upgrades would be immediately scheduled and implemented was a good thing.
By the way, broadband made them another tidy pile of cash this quarter, with an increase in subscriptions, all which helped make their overall losses from an accounting change look a bit lower.
Cablevision
Meanwhile, another cable operator decided to take a nobler approach. Cablevision quietly did their corporate responsibility thing and upgraded their cable broadband system to DOCSIS 3 without launching a pledge drive, (tote bag for 40GB cap!) so they could be prepared to confront Verizon FiOS, AT&T U-verse, or any other broadband player entering their market. They also like having happy customers. So, instead of a claim the digital tidal wave was nearly upon us so pony up some scratch, they upgraded their network and created new high speed tiers. Tiers to attract customers into happily paying them more money for more service, so they can make bigger profits! What a novel concept. For $99 a month, for those who want super speeds, they’ll get them from Cablevision. Those who want to spend less on a standard plan never have to worry about their connection slowing down any longer, either.
This morning illustrated once again why it is so critically important to check out the claims and statements being made by companies that want to convince you paying them a lot more for less is a good idea. To think I was contemplating launching a multi-city bake sale to help bail out Time Warner from its horrible bandwidth demise, until I discovered their investors are being told everything is fine, the broadband division remains highly profitable, and they can even spend less on it in the quarters to come. So I guess readers will have to muddle through without buying my Save Time Warner Bundt Cake, at least until they’re back later this summer with the gas gauge and another story they’ll choose to share with us.
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“We have a listening process,” says Time Warner spokeswoman Robin Wolfgang. Yes, and here it is — Customer: “I want to keep the same plan I have right now and not pay three times more for the exact same Internet service I have today.” Time Warner: “No.” That about sums it up. 
